Study: The price of weed is lower in US states with legal retail outlets

Researchers from the University of Waterloo in Ontario, the University of Southern California in Los Angeles and the RAND Corporation have studied the prices and sources of weed among U.S. consumers in states with and without authorized recreational cannabis retailers.

«The results show that consumers use sources they are legally allowed to access, suggesting that more physical retail stores and online delivery services could increase the use of legal sources in states with recreational cannabis laws,» write the study authors.

Using data from the’International Cannabis Policy Study in 2019 and 2020, surveyors recruited 9,766 U.S. online respondents, aged 16 to 65, who had purchased dried cannabis flowers in the past year.

Cannabis purchases in States where cannabis is legal and those where it is not were then compared, notes the’study published online earlier this month in Cannabis and Cannabinoid Research.

Respondents living in US states that had not legalized cannabis for adult use, had only legalized medical cannabis, or had allowed recreational cannabis but no retail stores, all paid a higher unit price for weed.

Compared to states where recreational cannabis stores are legal, flower prices were 20.5 %, 23.6 % and 27.4 % higher, respectively.

The investigators found that most people surveyed in states with recreational cannabis stores had last purchased from shops/dispensaries, and that the likelihood of buying legally «increased with each additional year after the stores opened».

Researchers «report that consumers residing in states with a mature retail market rarely seek out the unregulated market for cannabis flower». Shoppers in recreational states with stores purchased about 80 % of the dried flower from legal sources over the past 12 months, the report notes.

In states like Colorado, who have been operating adult-use cannabis stores for nearly a decade, «consumers reported purchasing nearly 90 % of the dried flower from legal sources».

Price, a determining factor in the act of purchase

A report published last November concluded that price is the number one concern when it comes to buying cannabis.

«Price is consistently indicated as a primary factor in purchasing decisions,» said Matthew Hollingshead, President of Hifyre and Director of Innovation at Fire & Flower. He expects prices to remain volatile «as existing markets mature and new markets emerge.»

In 2020, the’Ontario Cannabis Store (OCS) has announced that its online prices were lower to those of illegal mail-order sites.

In its quarterly report at the time, OCS reported that the average price of dried flower per gram between April 1 and June 30 was $7.05, including tax. This compares with an average of 7.98 $ on illicit mail-order sites.

«The emergence of larger-format, 28-gram products at prices as low as 4.20 $ per gram (including tax) is another highlight of this quarter,» said Cheri Mara, OCS Commercial Director.

The study concludes that cannabis prices and purchasing behaviour are strongly influenced by the legal status of cannabis and the presence of stores. However, it takes several years after the legalization of cannabis for adult use «for the legal market to become established, with the number of retail stores increasing and prices decreasing.»